China week in review
Strong economic numbers and improving export statistics bolstered investor confidence last week
China released strong October economic numbers
Fixed asset investment and consumption remained the key economic drivers in October, while exports were still a drag on the economy. Data released last week showed no signs of cooling down in fixed asset investment, which rose by 31.6% year over year in October and 33% in the first ten months of 2009. While investment is still largely driven by stimulus spending, private sector investment has been on a steady rise in recent months, most noticeably in the real estate sector.
Consumption growth accelerated in October, up 16.2% year over year, the fastest pace since January. The eight-day National-day holiday this year was a contributing factor to strong consumer spending, as work days were moved around to make a longer holiday for people to celebrate the 60th birthday of the People's Republic of China. The 2008 National-day holiday was only seven days.
Exports totaled $110 billion in October, the second best level this year so far. Year over year comparison remained negative, but the decline was milder than the -15% reported last month. News from the recently concluded Canton Trade Fair, the largest of its kind for exporters, was mixed. While the number of participating exhibitors and buyers at the fair increased by double digits from last year, the total value of orders placed at the fair, at $30.5 billion, was still $1.1 billion less than 2008. Moreover, more than 90% of these orders are for delivery within the next six months, which indicates that buyers have yet to see a strong rebound in demand for Chinese goods in 2010.
New loans in October were $251 billion, almost half of the September level, but still slightly higher than last October. Historically, October has been a low month for new loans. In addition, as lenders heeded regulator warning on credit risk, they became more selective in making loans. In the first ten months, Chinese banks have already given out a total of CNY 8.9 trillion in new loans, which is 82% more than the total new loans given out in all of 2008.
Market recap
Solid October economic data and improving export numbers released last
week boosted investor confidence. Consumer-related stocks received a
further lift after the government signaled that China will take
“vigorous” steps to stimulate domestic demand and restructure the
economy next year. Over the past five trading days, the Shanghai
Composite Index climbed 0.8% to 3,188 points, while the Shenzhen
Composite Index increased 2.1% to 13,264.
Macro and industry updates
Central Huijin Investment to sell CNY 60 billion yuan-denominated bond
The agency, which is under China's sovereign wealth fund, plans to use the funds raised to invest in the Export-Import Bank of China (a State-owned provider of trade credits) and China Export and Credit Insurance Corp. Currently, Central Huijin holds significant stakes in the four major State-owned banks on behalf of the government.
Internet firm Shanda enters movie & TV programme production
Shanda, well-known as an online game operator, last week invested CNY 600 million in a joint venture with Hunan TV, one of China's most innovative media and entertainment groups. The joint venture will produce and distribute movies and TV series, and provide agency services. This should help Shanda monetise the content on its online literature site. One of the JV's first projects will be to make a movie based on a popular novel posted on Shanda.
McGraw-Hill eyeing China's training market
JD Power and Associates, a subsidiary of McGraw-Hill, has reached an agreement with China's education software company Ambow Education to tap into professional education and training market in China. The company expects to train about 20,000 technicians annually.
Contributions from Iris Tan and Lun Lu.
